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Annual Report 2017
Annual Report 2017
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Annual Report 2017
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Table of contents for the Annual Report 2017 report

Operational review
Key FiguresTo our shareholdersAbout Precious Woods
VisionFocus on economic, social, and environmental added valueProducts and marketsGlobal and economic challenges in a dynamic environmentA pioneering role – more than simply sustainable certificationStrategy: Market orientation and continuous optimization of the value chainMedium term goals: Sustainable growthManagement organization with increased market orientationMilestones Precious Woods
Group results
Income statementBalance sheet
Brazil
Higher harvest volume – lower productionPrecious Woods Amazon in briefContinuous efforts on legacies and exceptional factorsSocial and environmental sustainabilityOutlook for 2018
Gabon
Increase in productivity and profitabilityIn a stronger position for the next phaseReport on further progress in social and environmental sustainabilityPrecious Woods Gabon in briefOutlook for 2018
Trading
Precious Woods Trading in brief
Carbon & Energy
CERs from Brazilian biomassEmission trading together with myclimatePrecious Woods Carbon & Energy
Sustainability
Selective wood utilization is not synonymous with sustainable forest management4 : 1330 000 000tCFauna / FloraPrecious Woods Amazon closely connected with the local populationSustainability as our entrepreneurial principlePrecious Woods in Gabon – gentle use and wildlife protectionIllegal logging threatens certified timber trade and sustainable developmentOpportunities for FSC certified timberThe role of forest management in the climate debateSustainability Advisory Committee (SAC)
Corporate Governance
1. Group structure and shareholders2. Capital structure3. Board of Directors4. Group Management5. Compensation, shareholdings, loans6. Shareholders’ rights of participation7. Changes of control and defence measures8. Auditor9. Information policy
Shareholder information
Share capitalEquivalent to 100 sharesStock market listingShare register informationCompany headquartersStock price development
Financial Report
Precious Woods Group financial statements
Consolidated statement of financial positionConsolidated statement of profit or lossConsolidated statement of comprehensive incomeConsolidated statement of changes in equityConsolidated statement of cash flowsNotes to the consolidated financial statements
1. Basis of presentation and accounting policies2. Financial risk management3. Trade and other receivables4. Inventories5. Other current assets6. Property, plant and equipment7. Forest, forest improvements8. Intangible assets9. Investment in associates10. Non current financial assets11. Trade and other payables12. Financial liabilities13. Provisions14. Financial instruments by category15. Convertible loans16. Share capital17. Related party balances and transactions18. Employee benefits19. Net sales from trading activities20. Revenue from carbon emission reduction activities21. Other production costs22. Depreciation, amortization and impairment23. Direct and indirect labour costs24. Other operating income and expenses25. Financial income and expenses26. Leasing27. Earnings per share28. Contingencies29. Financial information by segment30. Major shareholders31. Income taxes32. Currency translation rates33. Divestments and acquisitions34. Subsequent events35. Approval of financial statements and dividends
Report of the statutory auditor on the consolidated financial statements
Precious Woods Holding Ltd financial statements
Balance sheets as of 31 December 2017 and 2016Statements of income 2017 and 2016Notes to the financial statements of Precious Woods Holding Ltd
Essential accounting and valuation principles1. General2. Authorized share capital3. Conditional share capital4. Investments in subsidiaries5. Other short term interest bearing liabilities6. Long term interest bearing liabilities7. Board and Executive compensation8. Depreciation, amortization and impairment9. Major shareholders10. Pledged assets / other securities11. Other note / Full time employment12. Other note / Residual amount of leasing obligations13. Other note / Significant events after the reporting date
Report of the statutory auditor on the financial statements
Additional information
Contact addresses
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Increase in productivity and profitability

The harvest volume in 2017 was 238 600 m3, an increase of 21.2 % over the previous year (196 800 m3). In the sawmills in Bambidie, 126 000 m3 and thus 1.4 % more logs were processed, and yield was increased by 3.8 percentage points. This resulted in a sawn timber production of 44 700 m3, an increase of 13.6 % over the previous year. The fact that sales did not increase to the same extent is due on the one hand to the product mix and on the other hand to the delivery difficulties at the end of the year, which led to an increase in sawn timber inventories. Market prices for sawn timber were volatile in the reporting period. This entailed a recovery in prices at the beginning of the year and a decrease slump over the course of 2017.

The veneer plant (TGI) processed 55 200 m3 and thus 4.5 % fewer logs, but the yield was increased by 0.5 percentage points. As a result, the production volume of veneer declined by 3.6 % in 2017. Demand for top quality was high all year round, but demand for the second-grade goods fell sharply and forced us to reduce production by one shift to 2-shift production starting in September 2017. We were able to resume full production in mid-January 2018 thanks to changed market conditions.

PW Gabon’s total investments in the amount of EUR 2.5 million were used mainly for forest machinery, homes for employees and their families in Bambidie, the replacement and expansion of our vehicle fleet, and a new drying kiln for the veneer plant. The increase in the harvest volume required the establishment of an additional team for forestry operations and the associated technical equipment.

The staffing situation remained stable, and the fluctuation among expats was in line with the usual pattern. The maintenance team was strengthened, and additional skills were developed, promoted, and expanded at various locations.

Now the focus will be on further expanding the proven management team and thus creating the conditions for managing targeted growth projects.

The liquidity situation eased thanks to the result achieved, although the input tax credit with the Gabonese government meanwhile amounts to EUR 3.7 million. In 2017, it was possible to finance parts of the investments out of the cash flow. However, a large part of the operating cash flow was tied up in inventory, which increased due to delivery difficulties. During the year, there were repeatedly bottlenecks in rail and road traffic. There were too few railcars available, and an interruption in the road network caused a detour of more than 200 km each way. While a second port was inaugurated in Owendo, operated by the same operator, the reorganization of port operations caused disruptions that lasted until the end of the year and made it impossible to ship all goods on time.